Oct 18, 2013 | Marketing, Personal Rant
Bushfires are raging, again, around NSW, houses lost, businesses destroyed, kids stressing out because they cannot get to HSC locations, and “fireies” putting themselves in harms way.
Yet, we watch, are concerned, but go about our dailies as best we can.
Last weekend my sons car was one of those caught in the fire at Olympic park, another of the many started by some idiot $???%%$# throwing a cigarette.
Whilst it was just a car, well insured, and with few personal things in it, the impact on our emotions as we waited to find out if his was one of the 43 destroyed was significant, because it was close to us, happened to us, and not somebody we did not know.
It is the same in all aspects of our lives, the closer we get, the more we feel it, whatever “it” is.
Herein lies the fundamental truth about marketing.
Understanding what is happening in a consumers mind, how they are responding to some stimulus, how their emotions are playing out, in response to the stimulus you are delivering, is the key to engaging with them.
My Dad always repeated the advice of Niccolo Machiavelli, to hold your friends close, but your enemies closer, but it seems to me that adding your customers to that list of bosom buddies is also crucial.
Oct 17, 2013 | Branding, Category, Customers, Innovation, Marketing
Cottage cheese is a pretty dull category in supermarkets. A relatively tasteless, low calorie (therefore it must taste crappy, right?), price competitive, group of products.
Yes, so we thought.
Years ago, 25 years in fact, I was the GM Marketing of a major Australian diary company with the leading brand of Cottage cheese. I thought all of the above, and we struggled to make any return, let alone one that was a competitive use of the capital tied up.
We had very good data, for the time, remembering this is pre-internet. We knew who sold our, and competitive brands in what quantities, and pretty much to whom, as we had good U&A (usage and attitude) data. As a result we were able to segment the market pretty well by usage, demographics, geography, and basket. However, whatever we did, we had trouble moving the sales needle.
Almost as a last resort, we ran a small recipe competition on the side of the packs, easy, low cost, a prize draw of a holiday at a health resort on the Gold Coast. We got a few hundred entries, a failure by our pre-agreed metrics, so we thought we knew something else that did not work. However, because there were so few, we took the time (there was a young work experience person to utilise at the time) to write back to all the entrants saying thanks for entering, and sending them a few of the top recipes we had received, just to be polite.
The response astonished us.
A very high number wrote back saying thanks for the recipes, and telling us how they used the products, what was right and wrong about them, all sorts of information we did not have, or had not thought was relevant.
Turned out, cottage cheese was not a “calorie avoidance food” it had uses in all sorts of areas by all sorts of people we had not seen as in our market, in fact, had not considered. The job we assumed was being done by cottage cheese, deduced by looking at our data, from our perspective, was not the job that consumers were hiring the product to do.
Long story short, we slowly built a database, all done by hand and snail mail, so it was a significant resource sink, a cottage cheese club in effect that shared recipes, stories, and funny events. All pretty mundane these days with the tools available, but a major undertaking in 1988.
Our sales went up, our promotional spend with retailers dropped, our price sensitivity reduced significantly, and had several successful range extensions, and we suddenly were making very good returns.
The moral is, make sure you understand the job that consumers hire your product to do, make sure you see it through the consumers eyes, not yours.
Oh, and two more lessons,
1. Social media marketing is not new, just the tools now availabel make it easier, so now everybody is doing it.
2. Cottage cheese is really very nice, 20 years after leaving the company, i still buy and use the product, in all sorts of odd ways, learnt from the “clubbies”. Brand building by another name.
Oct 16, 2013 | Change, Collaboration, Marketing
Intelligent design is a huge discredited furphy perpetrated by Christian fundamentalists in the US on sections of the school system.
But, taking the notion of viewing something through an entirely different lens a bit further, intelligent re-design becomes a notion that offers the thought that business models can sometimes be, and often should be, turned on their heads as a way of evolving.
Often I find myself between things, having time to kill before the next commitment, and I sometimes spend that time in a café having a coffee, and reading, thinking, and generally just contemplating.
It occurred to me the other day whilst indulging in such a contemplation, that I was not buying a coffee, I was buying a pleasant location to spend time, the coffee was just the excuse.
In effect, I was paying for time, not buying a coffee.
In most cases, there is the apparent reason stuff happens, then when you scrape away, the real reason sometimes becomes apparent. People who buy expensive cars are not buying transport, they are buying an object that says something about them to others, just as my coffee is an excuse to sit quietly in a cafe.
It is the articulation of this “real reason”, difficult as it usually is to articulate, where great value can be created. The breakthrough over the last few years that is enabling much of the development is the two sided market capability enabled by the web. Participants in the so called “collaborative economy” a term popularised by Jerry Owyang are all busily re-designing business models all over the place.
Oct 15, 2013 | Marketing, Social Media
Wisdom of Warren Buffett
We are rushing headlong towards automating the marketing process, everything from the call centre systems to advanced automation like Marketo and others. However, we are social animals, and no matter how much we set out to automate, you simply cannot replace the eyeball to eyeball impact of personal meetings, creating a paradox.
There is an ad in the current HBR magazine, a portrait of Warren Buffett asking “Ever give a firm handshake over a speaker phone”? Warren is known for asking the key question, of breaking complications down to their core elements, and valuing simplicity. Marketing automation is far from simple, leveraging as it does, assumptions built into strings of algorithms, driving automatic responses.
The real benefit of the tech solutions are the opportunities the tools offer for productivity improvements in the way we use our time to prospect, engage, and sometimes transact, but it will always take a person to take an automated exchange, and turn it into the process that leads to a human relationship.
The old metaphor of using a hammer to drive a nail, not a screwdriver applies in spades. The software being marketed are just tools to be used by people, some tools are better, and more appropriate than others, and the skill of the user plays a huge role.
Don’t be fooled about just how hard it is to use these tools well, and know they cannot ever take the place of personal interaction.
Oct 14, 2013 | Collaboration, Customers, Marketing, Social Media
Question: How do you know when your enterprise has become “Social”
Answer: When it evolves from a vertical, and functionally oriented enterprise with power emanating from the position descriptions, to one that is cross functional and project oriented, and power comes from capability.
It really has little to do with the deployment of social media tools, the bring your own device policies, the # at the sales conference, or the CEO’s profile on Linkedin.
Social businesses put the customer at the centre of what they do. They set out to innovate in the manner of delivery as well as the nature of the value they deliver to consumers, and they see the future sooner, and more clearly than others, simply because they are “connected” to their customers and potential customers.
Oct 10, 2013 | Change, Governance, Leadership, Marketing, Strategy
Canadian dairy processor Saputo looks set to take control of Warrnambool Cheese and Butter (WCB) with a $7 a share offer valuing the company at $370 million, which trumps an existing cash and shares offer from Bega Cheese which values WCB at 320 million.
$7 a share is a substantial premium over the Bega offer price for WCB, and appears to be a very full price on any conventional analysis. Trouble is however, that conventional analysis has some difficulty factoring in the strategic value of the business, one of only three substantial dairy businesses left in Australian hands.
WCB’s performance was woeful a few years ago, being on its knees in 2009 after a trading loss of $20 million on $441 million turnover, and having unsustainable gearing. Since then there has been improved but patchy performance, $8.8 million profit in 2010, peaking at $18.5 in 2011, down to $15.2 in 2012, and down again in 2013 to $7.5 million.
WCB has flown a bit under the radar as the dairy industry has been convulsed by take-overs and mergers in the last 25 years, and is now one of just three locally owned dairy businesses with any scale. The other two, Bega and Murray Goulburn have both tried to find a way to consolidate with WCB, and the Bega Chairman has been on the WCB board for several years, so should know the business inside out.
With 2 billion rapidly emerging middle class consumers on our doorstep in Asia, whose consumption of dairy products is rapidly increasing, the strategic value of WCB to the Australian economy is significant. However, the reality is that without a better offer, and subject to FIRB approval, (should not be a problem) WCB will be sold to Saputo.
Part of the challenge is the disconnect between the domestic market where the retail oligopoly is the price setter, and export markets where Australian dairy produce is a price taker. Inability to generate anything more than the cost of capital, at best, domestically, and subject to big fluctuations in international commodity prices and exchange rates, and not being a low cost producer, Australian returns in the industry have been very inconsistent. Now however, with the emergence of the Asian consumer, there is long term potential for value added margins. What is needed is patience, operational and business model innovation, and some really good leadership.
Pity we are no good at that
Also sitting on the desk of the new treasurer is the proposed takeover of Graincorp, by US company Archer Daniels Midland. Graincorp handles 90% of Eastern Australia’s grain exports, and roughly 75% of the crop, so is pretty central to the success of the Australian grains industry. A similarly strategic Australian asset that seems destined to be run for the benefit of others.
What do these North Americans see that we cannot?
Vale the Australian owned food processing industry.
